I recently had the pleasure of talking with Maria Korolov at HypergridBusiness.Com.  She was interested in understanding the differences between Hypergrid and VWRAP. (Who knows, maybe there will be a story about it in the near future?) But this got me thinking; there are very few places an interested non-specialist can go to learn about VWRAP, it's goals and approach to virtual worlds. This blog post is an effort to fill that gap.
The Virtual World Region Agent Protocol (aka VWRAP) is an application layer wire protocol used to create "inter-operable virtual experiences." It is also the name of the working group inside the Internet Engineering Task Force (IETF) developing the protocol.
Okay... that's a mouthful; let's break it down.
A "wire protocol" is a set of conventions and standards describing data flowing over a network. HTTP for instance, or SMTP are both wire protocols; they describe the format of messages web browsers or email clients generate. A protocol doesn't equal an implementation. The Apache web server, for instance, implements the HTTP protocol, but does not define it. So it is with VWRAP virtual worlds: the protocol lists what data is exchanged in between systems cooperating to "create" the virtual world. VWRAP is expected to be implemented by server software at Linden Lab , the OpenSimulator project  and SimianGrid (formerly Cable Beach.) 
We say that it's an "Application Layer Protocol" because it makes use of familiar net protocols for moving information around. That is, VWRAP messages are carried by HTTP and (possibly) RTP, the protocols responsible for the web and VoIP.
And what's an "inter-operable virtual experience?" This just means that virtual world viewers can use VWRAP protocols to simulate a virtual world shared by multiple participants. i like to say "virtual experiences" these days as I've been involved in some pretty heated debates as to what the term "Virtual World" means.
So VWRAP is a protocol and a community of people working to build systems that let users have a "Second Life-Like" experience, but in an "open" virtual world. That is, you can have an experience that looks like Second Life, but does not require your virtual locations or virtual belongings to be hosted by machines owned by Linden Lab.
There are several virtual worlds out there ranging from the game-like World of Warcraft™ to the open-ended Second Life™. Some are open source projects like Croquet , RealXtend , OpenWonderland  or OpenSimulator . Others are commercial services like ReactionGrid  or cooperatives like OSGrid. 
VWRAP is not an implementation or (like Hypergrid ) an extension to an existing implementation. It is an open protocol, developed by a community of interested parties with the intent that anyone can choose to implement it. So VWRAP will not be a new product, but likely a new feature to existing implementations and services that will make it easier for them to communicate with each other (though there are sure to be "sample implementations" of the VWRAP specifications.)
VWRAP is "Second Life-Like" in that it assumes a virtual world somewhat like Second Life™ or one created with OpenSimulator. World of Warcraft™, Croquet and OpenWonderland use protocols that are significantly different from the ones for Second Life-Like worlds. And the way they think avatars will interact is a little different. It's not impossible for these systems to use VWRAP, but they're not what VWRAP was intended to support (though there may be ways for these systems to use pieces of VWRAP; more on this later.)
Another important feature about VWRAP: some people will consider it incomplete. The people behind VWRAP chose to NOT standardize certain features of virtual worlds. VWRAP does not include standards relating to eCommerce or "game script" like linden dollars. Nor does it describe standards for virtual land ownership like Second Life's parcels and estates.
It does, however, make it easy to define new services and to extend existing services. so it should be pretty easy to extend Linden Lab's SnowGlobe viewer (and other open source viewers) to support different, world-specific eCommerce and land ownership features. You may not get to use linden dollars on OSGrid, but if a region owner wants to support something else, it should be pretty easy for the viewer developers to code it.
In other words, virtual worlds users should find the software they use get a little more robust and should see new features emerge a little faster.
So to recap: VWRAP is a set of protocols, not an implementation. VWRAP protocols are expected to not only be the basis for new products, but also to be added to existing systems as extensions.
The internet engineering task force (IETF)  is a "standards development organization" which focuses on internet protocols. It is well known for being the professional forum where TCP/IP (a very popular networking technology) and SMTP (the standard email protocol) were developed. the IETF is not a commercial organization; it's more like a non-profit or NGO. it's stated goal is to improve people's lives by making network equipment and software work together.
An interesting feature of the IETF is that when protocols are developed under it's auspices, they're considered "open" and "public." That is, there is no charge to implement them. you don't have to sign non-disclosure agreements and you don't have to pay money to download them. membership in the working groups that define standards is open to the public; anyone can participate. When Linden and IBM approached the IETF saying they wanted to develop a "next generation" protocol as an IETF activity, they were explicitly agreeing to public commentary and participation in the process.
That being said, there are some intellectual property issues. Apecifically, there is a patent held by IBM that may or may not have bearing on the implementation of VWRAP services. The IETF process requires participants to disclose any known patents related to the work. This allows developers to decide if they want to participate or agree to make a standard that may be covered by software patents. in this case, IBM filed the requisite disclosure  and has offered VWRAP developers a blanket license to use their intellectual property for the purpose of implementing the VWRAP standard(s). i am not a lawyer, however. You should get competent legal authority to verify what i just wrote.
There's been a little confusion about what we're trying to do with VWRAP. we're not trying to compete with Hypergrid or Croquet or OpenWonderland. rather, we're trying to define the protocol for services that anyone could implement, even 2d web services.
We'll know we've succeeded when after publishing our specifications, users can log into virtual worlds using their twitter or WikiMedia account credentials. Or if they're able to use the WikiMedia commons as an asset server. Or if they can teleport between OSGrid and Second Life™.
The VWRAP working group is made up predominantly of implementers. That is, people who write software are disproportionately represented. We need more input from people who deploy virtual worlds and from people who live in them. Most of the discussions will be highly technical in nature, and that might be intimidating to some.
But it is an open process; everyone is welcome to listen to the discussion. As long as you're not abusive to other list participants, you are welcome to post comments or questions. Keep in mind that the answers may not be exactly what you want to hear, and questions should be focused on the technology (and not Linden or OSGrid policy.) But as technology developers, we need to know what your use cases are.
The mailing list for this group is email@example.com . A good place to start is by reading the "Intro and Goals"  internet draft.
I hope this answers a few questions about the VWRAP protocol and working group.